A New Dynamic: Rising to the Challenge of Change

Plaid Cymru’s Shadow Finance and Treasury Minister Adam Price has set out today his party’s plans to reform council tax.

Adam Price said that Plaid Cymru will reform the “grossly unfair” council tax system, which will save up to £400 per year for those on the lowest bands. Adam Price made the announcement at a keynote address at Cardiff School of Management where he also set out his party’s plans to introduce a new culture of government. Read his speech here:

I think it was Churchill that said that a speech should only have one point, but Cabinet Ministers were allowed three.

As a recently appointed Shadow Cabinet Minister I am going to split the difference and allow myself two major points, one about the machinery of government and one about finance that is the fuel on which the machine runs.

But in a sense what lies behind both of these is the same underlying idea, that the how of Government is often more important than the what. Or indeed the who. Policies and personalities in Government often founder on something much deeper which is the capacity of the system as a whole to effect change, whatever the change is and whoever the change-maker. We need a new dynamic, a new way of working, across Government and between Government and citizen if we are to get Wales moving.

Governments at their best can achieve great things. John F. Kennedy famously set a goal for the United States in 1961: to land a man on the moon and bring him back safely to Earth by the end of the decade. Now that was what you call a decade of delivery.

All the more remarkable given it was achieved largely posthumously.

Wales has had its own moonshots since the dawn of devolution.

There was the goal of closing the economic gap to 90% of UK GVA per capita by 2010.

There was the goal of being in the top 20 PISA world education rankings by 2016.

There was the goal of achieving 5-year cancer survival rates equal to the best in Europe by 2015.

All very ambitious targets, straining at the outer limits of the possible, like Kennedy’s New Frontier.

But these were great goals which were never met, and the failure to meet them was not marked by a single resignation statement or even an explanation. They were simply quietly dropped.

The purpose of this speech is not to lay bare the inadequacies of the current Administration.

But there are too many of them to be coincidental.

Our economy and our education system have declined relatively under devolution. It’s worth reiterating that point after the rather selective reading of economic history we heard from the First Minister yesterday. Regional GVA per capita in Wales was 72% of the UK average in 1999. By 2014, the latest year for which we have figures it had fallen to 71.4%. That’s a devolution dividend of -0.6%.

The most we can say for our health service, despite diverging radically from our near neighbours, is that it is no better and no worse - though our waiting times are indeed the worst of all the four nations. Over the last ten years most parts of our country have seen one or other core public service in special measures, a sobering reminder of a system in dire crisis.

Let’s not forget the Government’s own appointed Williams Commission said this:

“Overall the performance of the main public services in Wales is poor and patchy and is characterised by a lack of ambition……stagnant performance over time and excessive variations in performance.”

That is not a reference that any candidate would want to have for any post, let alone the highest position in the land.

Any incoming Government of any hue needs to understand the underlying reasons for this systemic failure if it is to have any hope of success. Simply changing the faces around the Cabinet table or the policy papers on it would condemn us to another five years of relative failure, which if we set the bar low enough of course can seem like a form of success.

The core problem is that Government in Wales has become good at the wrong things and bad at the right things.

Good at avoiding blame when things go wrong

Good at keeping Ministers out of trouble.

Good at defending the status quo.

Bad at basing policies on evidence

At managing resources efficiently

At innovating, reforming and improving service delivery

At being accountable

It’s a long list.

To be fair, the Welsh Government faces the same generic problems that Governments are facing throughout the democratic world. But there are some unique features to the Welsh Government’s predicament which are of their own making. And they flow from a number of conscious decisions:

The decision to adopt a strong departmental model with a weak centre - the so-called polo-mint government, a government with a hole at the centre.

The decision to shut down executive agencies outside of Government - the so-called Bonfire of the Quangos

The decision to oppose the kind of market mechanisms embraced in England and North America – the so-called clear red water as referenced by Rhodri Morgan in a famous speech and written by the current Health Minister.

Add those three metaphors together - and you get a ring of hot water, which is presumably Wales going down the plug-hole.

Let’s take each of them in turn and hear what Plaid Cymru, the Party of Wales, is proposing to put in their place.

The term silo government is such a familiar concept to us now that it has become a cliche. The Welsh Government operates as a series of semi-autonomous republics rather than a strategically coordinated state. It is almost self-evidently true that this must have disastrous consequences for outcomes in a world of complex problems whose roots and resolution don’t fit neatly demarcated departmental boundaries. A failure to coordinate misses the opportunity to achieve the synergies that any truly comprehensive transformation requires.

One has the distinct impression that even when Labour governs alone, Ministers hardly talk to each other. Byw Celwydd, where there are discussions and even votes in Cabinet, is clearly a work of fiction.

The solution to this problem we have known for a long time and indeed the Welsh were the forefront of those particular innovation. It was a 100 years ago that David Lloyd George first created a central organising machine for the Westminster Government, a Cabinet Secretariat, the nucleus of today’s Cabinet Office, which employs 2000 people and is the motor of the UK’s Ship of State.

There have been some attempts at coordination. The Delivery Unit of six civil servants set up at the beginning of this term and the slightly beefed-up First Minister’s Dept set up subsequently, partly in response by Gerry Holtham’s stinging rebuke which was the source for polo-mint quip.

But these seemed to be modelled on Lloyd George’s other innovation, the so-called “garden suburb” of half a dozen key advisors, a third of them Welsh, so-called because they were hosted in the garden of 10 Downing Street. This was the seed of the move from Government by Cabinet to Government as a sort of medieval court, complete with courtiers as gatekeepers to power and very little in the way of collegiate discussion or collective responsibility. Tony Blair moved the Suburb to the Sofa, and the result was the War in Iraq.

We’ve managed to avoid the pitfalls of concentrating power too much in the hands of a single person; the First Minister of Wales is the only head of Government without an official residence. And the lights of Ty Hywel’s 5th floor seldom shine much after 6.00.

Is this a King without a Court, or a Court without a King? It’s difficult to say, but the phenomenon of petty fiefdoms and personal rivalries blocking a more strategic unity Wales-wide would be pretty familiar to the medieval Prince and early legislator the building is named after.

The answer is to do what almost every other Government in Europe does, and to create a strong central coordinating office at the heart of Government, a centrally empowered Cabinet Office, answerable to the First Minister and staffed by Ministerial appointees, leading strategic delivery, alongside a strong Welsh Treasury led by a Finance Minister committed to transformational change. We can further remove the scourge of departmentalism by doing what the Scots have done - by disempowering the departments, adopting instead a more functional and strategic approach.

If the first problem in the Welsh Government is that they don’t talk to each other, the second is that have very little that is interesting to say. The abolition of executive agencies was, in retrospect, the wrong decision at the wrong time for the wrong reason. Yes, some agencies had not fully adjusted to the new democratic era but that could have been addressed by a change in the culture of accountability.

In Wales we have sucked power into the Centre, with a Welsh Civil Service as large as Scotland’s which has almost twice the population.

Centralising power in the Civil Service can work as a model of Government under certain conditions. But the so-called Napoleonic model requires a pool of technically brilliant, highly capable public service leaders. In France they churn them out factory-style in the Ecole Nationale. There was talk of creating an integrated Welsh Public Service under Rhodri Morgan to widen the reservoir of talent and a Civil Service College to feed it, but both these laudable ideas were implemented half-heartedly. As so often the case we willed the end without willing the means.

The Bonfire of the Quangos - held famously on Bastille Day, hence its Napoloenic tendencies - might have heralded a new modus operandi, ending the disconnect between practice and policy, between service and strategy - but we have seen precious little of that in reality. You would be hard-pressed to find many ex-teachers among the hundreds of officials in the Welsh Education Department. There has been sporadic policy innovation under certain Ministers. Think of Jane Davidson and the heroic effort to introduce Finnish-style learning-through-play.

There have been no shortage of strategies. But there was no strategy, no structure, no theory at the level of the Government as a whole.

What we ended up with was a Napoleonic style system staffed by British Civil Servants trying to deliver Scandinavian policies. Generalist civil servants in the British tradition, don’t know anything in particular, not by accident or omission, but by design.

The string of basic errors - the under-valuation of the land by the Regeneration Investment Fund for Wales, the over-valuation of Cardiff Airport - are unlikely to have happened in the days of the Land Authority for Wales or indeed the Welsh Development Agency, for all its inadequacies, organisations that had people with relevant experience at the helm.

The First Minister yesterday trumpeted the rocket number of inward investment projects last year, but a large part of the reason for that is that the projects have got smaller. And his presumably sincere mocking of the golden days of the WDA doesn’t stand scrutiny when we realise that the % of UK inward investment jobs that Wales achieved in this supposed record year was half the 15% average – average mind you – that the WDA achieved between 1990 and 2014.

Instead of the Napoleonic we should have adopted the small country, Nordic model of a smart, efficient central state orchestrating a wider system where detailed strategy and delivery is the work of properly empowered executive bodies, with strong professional competence and technical expertise, democratically accountable but with the autonomy and agility needed to improve the quality and speed of decision-making.

Carwyn Jones has dismissed this as Plaid wanting to set up more Committees. In fact, it’s the opposite of that. If the Tories had their Quango-State, Labour has its pro-bonocracy.

This Government has a veritable army of committees, councils and commissions.

I know as until very recently as I chaired one of them, the Innovation Advisory Council for Wales - and indeed, the Williams Report documented the core function that these advisory bodies play in the structure of governance in Wales. One of the key recommendations of the Innovation Council is that we need to move from a purely advisory council to an executive National Innovation Body in order to achieve the laudable objectives set out in the Welsh Government’s Innovation Strategy.

We have excellent strategies in so many areas, but the theory of change that we currently operate by is for the Assembly to create a statutory duty on someone else to do something and then create a Commissioner or an Ombudsman to report back to the Government on why that is not being done.

If there was a Nobel Prize for strategy and scrutiny, Wales would be world-famous - it’s just what happens, or doesn’t happen, in between that is the problem. This is a Government that is trying to steer the country when it has forgotten how to row.

Local knowledge is also a form of expert knowledge too. So alongside the delegation of decision-making power we need internal devolution within Wales. Regional government has emerged within Wales by default in recent years and that needs to be given a consistent institutional form if we are to realise the benefits of a tier that is small enough to be sensitive to local needs but large enough to develop true economies of scope. Finding the right form for decentralised authority has been the Holy Grail of Welsh politics from the cantrefi of the Middle Ages to the Counties of 1974 or 1996.

Our solution is not to abolish the existing councils but to use them as the building blocks of a new system of regional government made up of combined authorities led by directly elected mayors. These regional bodies will take over the primary healthcare and public health responsibilities of the local health boards that local government lost under the Heath Government, effectively ending the so-called Berlin Wall between health and social care. In everything from transport, to health, social care, education and the economy, a national government in Wales will have powerful regional partners with the capacity to effect change, while maintaining local accountability.

The final point is how we can catalyse innovation and improvement without resorting to the blunt instrument of the market. The rejection of privatisation and marketisation as a simple solution to inertia and inefficiency in the public sector is the correct one. Competition cannot work as a very effective tool in most of Wales where urban notions of choice simply don’t apply.

But what we have signally failed to do though is to put an alternative system in place to drive the service improvement necessary if we are to meet the financial challenges of delivering better outcomes at lower cost that we will inevitably face.

There are two baskets of solutions that we will adopt.

One is the power of information. As the old adage goes, you can’t manage what you can’t measure.

The Welsh Government has generally rejected the sort of league table approach adopted in England because it’s tainted with the marketisation brush.

We do have 243 indicators for the Programme of Government but they are neither detailed enough to be of use to an individual citizen nor high-level enough to give a sense of overall success or failure. It is a case of hitting the target but missing the point.

If we are to improve as a nation then we need to tap into the collective intelligence of the entire nation. That means throwing open the data-warehouses of Government to allow citizens and companies and social innovators to crawl this vast wealth of information giving us better accountability better understanding, better efficiency, and perhaps the seeds of a new industry.

We’ve just witnessed the creation of the first billion dollar open data company. We could be at the forefront of this in Wales. We have in south Wales - in ONS, the IPO, the DVLA and Companies House - four of the biggest data-stores of Government in the UK. It was great to see the announcement of the new Data Science Campus in Newport last week. We could be a world-leader in smart government. So we will commit to the principles of Open Government, including the proactive release of all Government information (not just Cabinet Decisions), but records, reports and datasets in accessible formats for reuse for any purpose by anyone.

We’ll also simplify the yardstick of success to three key objectives for the next decade, our Three by Ten:

Slashing the economic gap between Wales and the UK by 10% by 2026 and achieving parity a decade later

Saving 10,000 lives over the course of a decade by cutting avoidable deaths by 25% by 2026

Achieving a top ten place for Wales in Europe in the five PISA rankings within a decade

These are ambitious goals which will require radical reform which goes far deeper than the structural change of reorganisation. Culture eats structure and strategy for breakfast. We have inherited an attitude of mind from the days of the Welsh Office more fitted to administration than to innovation. A culture that is cautious, conservative and risk-averse. Nobody gets sacked for purchasing IBM seems still to be the mantra of Cathays Park - even though , of course, nobody buys IBM any more.

We want Wales instead to leverage its small country advantage – big enough to scale beyond the local but small enough to be manageable – to become the pre-eminent global test-bed for public service and economic innovation.

I’m glad to have worked over the last few years in setting up Y Lab, a public service innovation lab set up with the support of Welsh Government. We will build on that foundation, establishing new innovation labs in the fields of education and poverty reduction to trial and test new ideas in the field in the context of a new experimentalism, committed to the search for new solutions, but also to ending faster those that don’t succeed.

Embedding innovation at the core of Government means creating a new type of leadership in the Welsh Public Sector. So we will give to Wales our own version of the Ecole Nationale, or indeed the Kennedy School where I had the privilege of studying, a new School of Public Leadership and Public Innovation, the new Centre for Public Service Leadership that Williams called for but the Government refused. Half Civil Service College, half graduate school, creating a world-class cohort of public service leaders and managers, focused on the new wave of ideas for transforming Government: public service innovation, service design, behavioural economics, digital delivery. We want to grow a new generation of leaders here in Wales but the best way to do that is to create a new world-leading institution which will also attract the tomorrow’s leaders in small nations, cities and regions across the world – because we learn more as a nation when we’re open.

The Finance Ministry needs to be part of a new dynamic public sector - no, the words need not be an oxymoron. We will invest in an Innovation and Intrapreneurship Fund to invest in innovative ideas from the bottom-up and the outside-in - from public sector workers, researchers, entrepreneurs and citizens - that yes have a higher risk of failure - as that is part and parcel of the innovation process - but which potentially, collectively carry with them the promise of transformational change.

A smart Finance Ministry will be an agent and ally of change.

A new dynamic Finance Ministry can work with the Economy Minister to create an independent National Infrastructure Commission, a public corporation that will plan, fund and deliver infrastructure investment in transport, energy, housing and other vital areas. The Welsh Government is struggling at the moment with the demands of dealing with a trinity of transport projects: the rail franchise, the Metro and the M4 relief road. We can’t unlock the bottlenecks in our transport system without doing the same in our system of Government.

NICW will be built as a centre of specialist knowledge in the procurement and project management and funding of major infrastructure projects, an example what a distributed government can do when it delegates decisions to people with the knowledge necessary to get the nation moving.

A new dynamic Finance Ministry will become better at stopping things that don’t work, another of those long lists of things that governments singularly fail at. We are strongly of the view that the Welsh Government is overdue for an efficiency and effectiveness review. There are units within Welsh Government set up to administer grants that are more expensive to run than the total of the grants they administer.

We will conduct three major efficiency reviews over the course of our Government:

An independent Budget Savings Commission led by people with business experience established to report within the first 100 days of a new administration

A Zero-Based evidence-based review to identify the Government programmes that are working and more importantly those that aren’t, ready to report within nine months

A Carter-like Review of Efficiency and Effectiveness within the Welsh NHS

Together these reviews will be charged with identifying £700m of savings which we will commit in advance to implementing. This amounts to reallocating a little less than 1% of the Welsh Government Budget per year over the course of the term. That’s a material change but consistent with the kind of figure that most incoming administrations are able to achieve, especially after long periods of one-party rule. Frankly if we you couldn’t achieve 1% a year, then there would be little point having elections at all.

As a dynamic Finance Ministry we should also be innovative in the use of the limited tax powers that we have. We are in an economic rut as a nation and as people, and to prise ourselves out of that rut we must pull hard on two levers at once, the lever of redistribution and the level of renewal.

The income tax powers Wales is currently being offered, shorn of the ability to change bands or thresholds, and with an as yet unclear fiscal framework remain a blunt and unwieldy instrument for the purposes of redistribution.

Unlike the Scottish Government we will not be able to effectively raise the personal allowance or reject the increase in the threshold for higher rate tax payers.

We could increase income tax rates to raise more to invest in public services and there may be public support for such a plan in the future. But having given it a lot of consideration we have decided that increasing tax without first reforming health and education runs the risk of alienating public support for self-government and, more generally, public support for tax-payer funded public services.

We will not increase income taxes over the course of the next Assembly term.

We do, however, have it in our power to radically reform the most regressive tax in these islands, a legacy of the Thatcher period, the grossly unfair Council Tax that levies almost four times as much as a proportion of wealth on the poorest as the richest. That is not the Welsh way, and we will take steps to address that injustice.

We will reform the Council Tax to make it fairer for those in the least expensive properties, cutting the annual liability for almost three quarters of all taxpayers. Overall almost one million households in Wales will benefit from a reduction in council tax under our scheme. A house in Band A will save on average £400 a year, Band B households £260 and Band C households around £160.

The top 5% of households in the very highest bands will pay more, around a third more, phased in over a number of years, with exemptions available for those who are asset rich but income poor, and a new Welsh Middle Rate of income tax as we are calling it, a small reduction in the current higher rate, to partially compensate for the increase in the upper bands.

I must emphasise partially. Because let’s be clear this change does shift the burden onto the broadest shoulders where it should always be. That may not be the Osborne way. But it’s the right way, it’s the Welsh way and the way we shall adopt. Radical, reasonable, balanced and fair.

In the same spirit we will help first-time buyers by raising the threshold at which stamp duty is levied from £125,000 to £145,000, removing over half of all buyers out of tax altogether.

Alongside the lever of equality we also need to deploy the lever of enterprise.

Three years ago we were the first party to respond to Brian Morgan’s review on business rates with a radical package of business rate reductions, taking 74% of all eligible businesses out of business rates altogether, and offering tapered relief to a further 13,000 businesses up to rateable value limit of £15,000. Today I can announce that we plan on going further and extend that offer of tapered relief to premises with a rateable value of £20,000.

This will mean that Wales will move from having the highest rates for small business to the lowest, giving us a new competitive edge in the battle to attract, retain and motivate the business founders of tomorrow.

The new Middle Rate too will make Wales a more attractive location for the entrepreneur, the engineer, the doctor and the dentist - because the inward investment most vital to our future is talent. Because shifting the burden of tax from income to wealth is not just good for enterprise but – for those of who have read your Piketty – it’s good for equality too.

This is the new dynamic. A new synthesis between the social democratic values of old and the enterprise, innovation and creativity of a new generation. A country of collective intelligence, to which all of us can contribute and from which all of us will gain. A new Government by itself will not mean a new Wales. A new Finance or First Minister will not mean a new Wales. A New Wales means governing anew. That is the challenge of change.